Bitcoin ETF Could Attract Registered Investment Advisors
A survey conducted by Needham, a financial firm, suggests that registered investment advisors (RIAs) would likely be the main driver of flows into a potential bitcoin exchange-traded fund (ETF) in the U.S. The survey included responses from 20 financial advisors, 75 Coinbase users, and over 200 individuals. The results showed that RIAs could benefit the most from a bitcoin ETF due to their limited ability to offer clients exposure to bitcoin currently. However, retail clients displayed little interest in crypto investing.
Advisors Expect Limited Client Interest in Bitcoin ETF
The majority of advisors surveyed anticipate that only 5% to 10% of their clients would own a bitcoin ETF if it becomes available. Currently, advisors are experiencing disinterest from clients regarding bitcoin and an ETF. However, they expect interest to increase if bitcoin prices continue to rise. The survey also revealed that investors who have not already purchased bitcoin are unlikely to buy a bitcoin ETF just because it is available.
Preference for Buying Crypto on Exchanges
Among existing bitcoin holders, the survey found that more individuals (49%) prefer buying crypto on exchanges like Coinbase rather than through a potential ETF (40%). This difference is promising for Coinbase, which generates higher revenue from trading. However, it presents a mixed outlook for Robinhood, which offers both stock and crypto trading but sees a greater take rate from bitcoin transactions than equities.
Rising Bitcoin Price and Market Enthusiasm
Bitcoin has experienced a significant rally in the fourth quarter and has gained 157% in 2023. The drumbeat for a bitcoin ETF has grown louder, and investors are also looking forward to the Bitcoin halving in the spring. Additionally, the Federal Reserve’s indication of possible rate cuts in 2024 has added to the recent enthusiasm surrounding bitcoin.
Hot Take: Limited Retail Interest in Bitcoin ETF
The survey results indicate that while registered investment advisors may drive flows into a potential bitcoin ETF, retail clients currently show little interest in crypto investing. Advisors expect only a small percentage of their clients to own a bitcoin ETF if it becomes available. Furthermore, investors who have not already bought bitcoin are unlikely to purchase a bitcoin ETF. Existing bitcoin holders also prefer buying their crypto on exchanges rather than through an ETF. However, the overall market sentiment remains positive due to the rising bitcoin price and anticipation surrounding a potential ETF approval.
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